Lyondell claims ability to fund US$8 bln bankruptcy loan, even in case of abandonment by ABN AMRO

26-Feb-09

The bankrupt petrochemicals producer Lyondell Chemical Co has claimed in court that its lenders can fund its US$8 bln bankruptcy loan, even if ABN AMRO forsakes the deal. ABN AMRO, which holds approximately US$3.4 bln in outstanding claims against the company has threatened to walk away from the deal, saying in an objection filed on Monday that the roll-up jeopardizes its existing liens on Lyondell's assets. ABN had committed to fund about US$326 mln of the company's DIP financing. The other 13 lenders have agreed to fill the funding commitments if ABN walks away from the deal and asked the judge to overrule objections to its loan. ABN had disagreed with how the other 13 lenders decided to document the roll-up loan, Lyondell said, labeling the objection an "intercreditor dispute." The company is seeking court approval of its debtor-in-posession (DIP) financing, which would be the largest in history. Investors have put in US$3.25 bln of new money, and were allowed to boost the seniority of US$3.25 bln of existing senior-secured debt by rolling it up into the DIP loan. An additional US$1.54 bln of revolving credit is secure by liens on Lyondell's receivables and inventory.